Commenting on the results, Warren East, Chief Executive, said: “2016 has been an important year as we accelerated the transformation of Rolls-Royce. Despite the significant market and aerospace product transition challenges identified in 2015, we have made operational progress and performed ahead of our expectations for the year as a whole.

“At the same time, we have delivered major changes to our management and processes and, while we have made good progress in our cost cutting and efficiency programmes, more needs to be done to ensure we drive sustainable margin improvements within the business.”

Highlights
-- Reported revenue up 9%
-- Reported loss reflects a non-cash impact of £4.4bn period-end mark-to-market revaluation of our derivatives and a £0.7bn charge for financial penalties from agreements with investigating bodies
-- Underlying revenue down 2% at constant exchange rates, reflecting weakness in Marine
-- Underlying profit before tax down 49% at constant exchange rates
-- Good free cash flow performance; led by working capital improvements
-- Final payment to shareholders maintained at 7.1 pence per share in line with changes announced in February 2015 giving a full year dividend of 11.7 pence (2015 full year: 16.4 pence)

Transformation programme
-- Well underway; over £60m incremental in-year savings in 2016; £80-110m further in-year benefit expected in 2017
-- On track for ~£200m annualised run rate by end 2017

Warren East added: “As I set out in November last year, it is now time to look further ahead. With my new team in place, our focus is turning towards the Group’s long-term goals. Over the next few months we will conclude our review of our strengths and investment opportunities and set out an appropriate vision for the business and the best way we can deliver sustainable shareholder value.”

“In the meantime, we will continue to focus on our key milestones. In Civil Aerospace, we need to introduce our new Trent engines and successfully deliver the ramp up in engine production. At the same time, we must ensure our wide ranging business transformation programme delivers the full benefits expected, not only in terms of cost savings but also the cultural and behavioural changes necessary to ensure the transformation is sustained and high standards of business conduct are maintained. These are essential if we are to become a more trusted, resilient company.”